1. Week 4 & 5
Financial Reports

2. Accounting Conventions
Monetary Convention
Accounting entity convention
Going concern
Accounting period convention
Profit realisation convention
Conservative doctrine
Disclosure convention

3. Classification of Transactions
Assets
Liabilities
Proprietorship
Revenue
Expenses

4. The Balance Sheet Equation
Assets = Liabilities + Proprietorship
Proprietorship = Assets – Liabilities
Liabilities = Assets - Proprietorship

5. Categories of the components of the Balance Sheet
Assets
Current Assets
Fixed Assets
Non-Current assets
Liabilities
Current Liabilities
Non – Current Liabilities (long term)

6. Categories of the components of the Balance Sheet
Proprietorship
Capital
Retained earnings
Net Profit

7. Profit and Loss Statement
Profit = Revenue – Expenses
Matching the expenses with the revenue of a particular period of time.

8. Further elements of the Profit and Loss Statement
Sales
Cost of Goods sold
Gross Profit
Operating Expenses
Net Profit

9. Cost of Goods Sold
The cost of the trading stock used up in the selling process.
Opening Stock + Purchases – Closing Stock =
Cost of Stock used
O/S + Purchases – C/S = COGS